Metal, mineral prices headed for recovery in 2015, analyst tells Nunavut Mining Symposium

Patricia Mohr, an economics and commodity market specialist with Scotiabank, speaks April 9 at the Nunavut Mining Symposium in Iqaluit. (PHOTO BY JANE GEORGE)

The mining industry globally — and in Nunavut — can look ahead to better times after 2015.

That’s the forecast from Patricia Mohr, an economics and commodity market specialist with Scotiabank, who gave the keynote speech April 9 at the Nunavut Mining Symposium in Iqaluit.

After a “scary” recession and drop in commodity prices in 2008, Mohr, who has received awards for her dead-on predictions about commodities like oil, gas, metals and minerals, told the symposium audience that she sees improvement ahead.

By 2015, Mohr sees a return to a “bull run” market, that is, a market displaying more confidence and higher levels of investment.

But there’s a catch — this improvement depends on continued economic growth in China.

China may lie about 10,000 kilometres from Nunavut, but its hunger for base metals, copper, nickel, zinc and aluminum is what drives the mining industry, even in Nunavut.

China’s 1.35 billion people want to own a car and their own house. As well, China plans to build more than 60 huge infrastructure projects, including seven ports over the next four years.

This hunger for the metals and iron used in manufacturing and building makes China “vital to the global commodity markets,” Mohr said.

And, when China does well, other countries do well.

But many in the mining industry still worry that China may not perform as well as hoped, Mohr said.

Its economic growth was increasing by about 10 per cent a year, but now that growth has stabilized. It’s no longer “business at all costs” in China, she said.

China’s steel production is likely to go down from 2014-16.

At the same time, low-cost supplies of iron, used in steel manufacturing, are coming on to the world market, which means there could even be a surplus of iron in 2016.

That leads to economic uncertainty, Mohr said.

And this means large mining companies are experiencing “a chill of caution.”

Companies are now examining project development more critically with some, like Baffinland Iron Mines Corp., reconfiguring to cut costs, Mohr said.

As for gold, its price has also peaked, she said.

To make money, gold mining companies have to cut costs and, because there are few high-grade deposits around, gold mining firms have to work harder to get what they want.

Uranium prices? These are now at “low ebb,” in the wake of last year’s nuclear disaster at Fukushima-Daiichi in Japan.

The increasingly-worried and cost-conscious mining companies will cut spending on mineral exploration in the territory by more than $100 million in 2013.

And Peter Taptuna, Nunavut’s minister responsible for mining, came with a message for them at the mining symposium during its opening session.

Nunavut wants to be an “attractive jurisdiction” for mining companies to do business in, he said.

In her talk at the opening session, Nunavut Tunngavik Inc. president Cathy Towntongie suggested mining companies work more closely with Inuit organizations and the Government of Nunavut to lobby Ottawa for needed improvements in infrastructure.

Poor infrastructure in Nunavut is a huge deterrent to mining development in the territory, says the Fraser Institute’s 2012-13 survey of mining and exploration companies.

For these firms, it means infrastructure in Nunavut is at about the same level as the underdeveloped west African country of Guinea.

Towtongie also sounded a positive note for the approval of Baffinland’s Mary River iron mine project, which is seeking regulatory approval for its scaled-down mine project near Pond Inlet.